COPY.
EARLY.
CONFIDENTIAL
70
Enclosure No.1.
Queen's Building,
18 September, 1935.
The Honourable
Colonial Secretary.
Sir,
I beg to report for the information of His
Excellency The Officer Administering the Government that the
Unofficial Members of the Legislative Council are unanimously
of the opinion that the Hong Kong Government ought, for the
purpose of making sure of a solvent financial position in 1936,
to arrange confidentially with the Chief Manager of the Hong
Kong & Shanghai Banking Corporation for the fixing forward,
in suitable instalments, of Exchange, so as to cover all the
Government sterling commitments of every kind for the year 1936,
which we were informed in the Budget speech amount, in round
figures, to £750,000.
In our view, unless the Government so fixes
Exchange forward, they are in fact presenting the Council
and the taxpayers with an unbalanced Budget for 1936, because
we consider that it is quite possible that, as the result of
Sir Frederick Leith Ross' recommendations the dollar in this
Colony may be stablised at some rate appreciably below 1/8
in order to approximate to exchange in China and to the Japanese Yen.
Even, however, if our above anticipations as to
the course of local exchange be falsified, we think nevertheless
that it would be worth while for the Government, as a matter of insurance against an unbalanced Budget for 1936, to fix exchange
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